Starbucks threatens to pull British investment over tax

LONDON (AFP) - Starbucks has threatened to suspend millions of pounds of investment in Britain over what it sees as unfair targeting by Prime Minister David Cameron over its tax affairs, according to the Sunday Telegraph.

The paper cited sources close to the coffee giant who said plans to invest £100 million (S$ 194.88 million) in new branches in Britain could be put on hold, claiming that the business was being singled out for "cheap shots".

Starbucks bosses reportedly demanded talks with Cameron after he said tax-avoiding companies must "wake up and smell the coffee" - comments seen as a clear swipe at the US chain which has been criticised for not paying enough corporation tax in Britain.

Speaking at the World Economic Forum in Davos on Thursday the prime minister said that corporations must "pay their fair share" of taxes as he pledged to use Britain's G8 chairmanship to counter tax avoidance.

"The PM is singling the business out for cheap shots, a company that, it should not be forgotten, has pledged to pay tax now and into the future," a source was cited as saying in the Sunday Telegraph.

Kris Engskov, UK managing director for Starbucks, met with officials at the prime minister's Downing Street residence on Friday, amid concerns about the "politicisation" of the tax issue, according to the paper.

The multinational has come under mounting pressure after it was reported last year that it had paid just £8.6 million in British corporation tax since 1998, despite generating £3 billion in sales.

Starbucks confirmed that it did not pay any corporation taxes in Britain for the past three years on sales worth £400 million owing to fees paid to other parts of its business.

Executives have argued that its British division, which employs some 9,000 people, is unprofitable.

However the company later pledged to pay £20 million in corporation tax over the next two years amid growing criticism from lawmakers and consumers.

Britain last month announced a campaign against "tax dodgers" and "cowboy advisers" to claw back £2 billion a year, after MPs alleged that multinationals were involved in "immoral" avoidance of tax.

Online retailer Amazon and Internet giant Google have also come under the spotlight for their tax policies in Britain in recent months.

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